Tuesday, February 03, 2009

Burden Of Proof

Megan McArdle makes the point that I've been making for awhile now- That the burden of proof in the stimulus debate ought to be on those who advocate for a stimulus. Amazingly, many of her commenters argue the opposite- that those of us who oppose the stimulus should bare the burden of proving that it won't work. This is just asinine. Even if you're the biggest big government liberal there is, you've got to admit that asking the government to spend tax dollars of any amount should require some justification. Now we could bicker about what that burden of proof actually is, with a libertarian like myself requiring a far greater burden be met before the government took any action, but that's a question of degree, not a question of who the burden is placed on.

The problem for both left and right is that this burden of proof talk, in practice, tends to take a backseat to desired goals. So many on the right are now questioning the economic stimulus with much more vigor than they ever questioned any aspect of the war on terror and many on the left aren't willing to scrutinize 1 trillion dollars in the same way the war on terror was scrutinized.

3 Comments:

Anonymous rose said...

Burden of proof: McArdle looks at the spending in terms of $ per person. I think its more compelling to look at it this way.

What is the interest rate we're paying on the trillion bucks we're borrowing to finance this? Let's say its 5%.

That's $50 billion of interest that we will be guaranteed to owe annually. $50b that will be taken from the private sector indefinitely to finance just the interest. And we know that private sector dollars generate around a 7% ROI...we have no idea what kind of ROI government spending generates, except that its lower than 7%.

$50b in ANNUAL INTEREST EXPENDITURES alone...and the burden of proof falls where???



A question that I have. Keynes believed that fiscal stimulus could jumpstart an economy in recession(although I'm not sure he envisioned ACORN subsidies as part of this)through a chain reaction that solved the crisis of confidence and stimulated private spending and investment.

Now, if the govt. is running a manageable deficit, then the spending doesn't need to be followed by immediate tax increases. But how do you stimulate confidence when you're spending money that every single idiot on earth knows is gonna generate higher taxes very soon? When Keynes theorized the positive effects of fiscal stimulus, I don't think he envisioned it in a massive welfare state that already burdened its producers w/ fairly high taxes. I don't think he envisioned bailing out an overly leveraged consumer, with an overly leveraged govt. I think he would've recognized that any positive short-term effects of the stimulus would've been more than offset by the incredible amount of interest the US govt. will owe going forward that will have to be paid for by the businesses and individuals taht this stimulus is supposedly making more confident.

My understanding of Keynesianism is very very low. But this seems to pop out to me as obvious. If you have a take i'd be interested in hearing it.

4:56 PM  
Anonymous rose said...

Are they really considering letting this "buy american" clause in the stimulus package stay? Did it really only take two weeks of an Obama presidency to get the US talking about protectionism in the midst of a severe recession?

We've got some wage limits in place now too and Obama already took steps to strengthen labor unions.

We've got a massive spending plan to stimulate employment.

Didn't we do this once before?

I mean look if democrats favor infrastructure spending and republicans favor tax cuts, that's a reasonable debate to have.

But we are seriously talking PROTECTIONISM! We seriously have crazy fucks running our country.

12:10 PM  
Blogger lonely libertarian said...

The one thing I'll say is that criticisms of the stimulus are being discussed in the media, no matter how hard the Administration tries to paint them as partisanship and old politics.

12:27 PM  

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